Magellan Midstream Partners operates petroleum highway

Magellan Midstream Partners operates a series of pipeline and terminal systems that distribute crude oil, diesel, gasoline and ammonia throughout the country.
by Adam Wilmoth Modified: October 30, 2012 at 11:59 pm •  Published: November 11, 2012

Magellan owns a system of pipelines and terminals that transport crude oil, gasoline, diesel, jet fuel and ammonia throughout the country. The company owns the longest refined petroleum products pipeline in the country. The 9,600-mile line stretches from Houston to El Paso, Denver, North Dakota and Chicago and includes 50 Magellan-owned terminals.

Magellan's crude oil investments are mostly in Texas, where the partnership is working to more efficiently connect the Permian Basin in western Texas and the Eagle Ford Shale of south Texas to Gulf Coast refineries.

The two oil-rich basins provide different challenges.

In west Texas, where oil and natural gas drilling has been in place for much of the past century pipelines and other infrastructure already are in place, even if they are not adequate to meet current production demands, Mears said.

Magellan owns a pipeline system that currently directs refined products from Houston to West Texas. The partnership is working to reverse the line and fill it with crude oil instead.

“If you have existing pipeline you can convert rather than building a new line; it's a huge advantage,” he said. “It gives you a tremendous competitive edge.”

South Texas, however, poses different challenges because there is little or not existing infrastructure.

“It's a jump ball,” he said. “Everyone's on a level playing field because everyone has to build new.”

The strong demand in both basins promises to keep Magellan and other midstream companies busy for years, said Tulsa money manager Jake Dollarhide.

“The more the economy drives back, the more important that infrastructure is going to be,” said Dollarhide, CEO of Tulsa-based Longbow Asset Management Co. “The more energy is coming out of those plays, the more infrastructure is going to be needed to service that production.”

by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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